WASHINGTON — A proposal by an Oakland firm to release a living, genetically altered organism into the environment is expected to be approved by the federal government within the next 10 days.

Under a recommendation by the Environmental Protection Agency's pesticide unit, Advanced Genetic Sciences of Oakland would become the first biotechnology firm in the country permitted to engage in such testing. The testing probably would be performed in January in an area near Salinas, Calif.

The experimental permit would allow the firm to spray strawberry plants with two strains of living bacteria that have been genetically altered to prevent frost from forming. Industry officials say the experiment may pave the way for federal approval of other genetically engineered products. The industry estimates that the eventual microbial pesticide market could reach up to $900 million a year.

Major Step

"This will be the first time that industry has gotten a genetically engineered product out into the environment," said Alan Goldhammer, a spokesman for the Maryland-based Industrial Biotechnology Assn. "We look at it as a major step."

But environmentalists have managed for two years to prevent such releases. Jeremy Rifkin, head of the Washington-based Foundation on Economic Trends, said Wednesday that he will pursue "legal action or political action" to prevent the testing if the EPA grants the firm the experimental permit.

Rifkin contends that long-term use of such products could drastically change rain patterns around the world and accuses the EPA of failing to do necessary tests to determine how the organism would react in the environment.

Administration 'Pressure'

"There are some well-meaning people at EPA . . . ," Rifkin said. "But I believe the pressure from the Reagan Administration and industry has been tremendous to move this technology on line without any complications or look at environmental considerations."

EPA officials denied they were responding to White House or industry pressure and maintained that they have done proper tests to analyze the risks involved.

Thomas Dyott, president of the Oakland firm, said scientists obtained the strains that will be released by removing a single gene from the natural bacteria. The gene that is removed gives the natural bacteria the ability to cause ice crystals to form.

"On the other hand," he said, "we recognize that this natural strain is very good at ice making and we're marketing the natural bugs for application where you want to make ice."

He said the firm hopes the new strains eventually will be used to protect peach, almond and apple trees.

Final Decision

The pesticide division of EPA will recommend approval of the permit but the final decision will be made by Dr. John Moore, assistant administrator of the EPA for pesticides and toxic substances. Moore has not yet received the pesticide unit's recommendation.

"We hope this is finally the light at the end of the regulatory tunnel," Dyott said. "We've been working for two years now trying to get the approval."

If the bacteria prevents frost on the strawberry plants, the firm will apply to have it registered as a pesticide. Dyott estimated that would take another two to three years. He estimated that $12 billion in crops are lost every year around the world because of frost damage.